83 FR 22539 - Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Reorganize and Amend The Nasdaq Options Market LLC Chapter XV, Section 3, Entitled “Nasdaq Options Market-Ports and Other Services

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 94 (May 15, 2018)

[Federal Register Volume 83, Number 94 (Tuesday, May 15, 2018)]
[Notices]
[Pages 22539-22541]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-10253]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83193; File No. SR-NASDAQ-2018-036]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
To Reorganize and Amend The Nasdaq Options Market LLC Chapter XV, 
Section 3, Entitled ``Nasdaq Options Market--Ports and Other Services

May 9, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on April 27, 2018, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to reorganize and amend The Nasdaq Options 
Market LLC (``NOM'') Chapter XV, Section 3, entitled ``Nasdaq Options 
Market--Ports and Other Services.''
    The text of the proposed rule change is available on the Exchange's 
website at http://nasdaq.cchwallstreet.com, at the principal office of 
the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to reorganize and amend Chapter XV, Section 
3, entitled ``Nasdaq Options Market--Ports and Other Services.'' The 
Exchange offers various services across its 6 affiliated options 
markets, NOM, Nasdaq BX, Inc., Nasdaq Phlx LLC, Nasdaq ISE, LLC, Nasdaq 
GEMX, LLC and Nasdaq MRX, LLC (``Nasdaq Affiliated Markets'').\3\ The 
Exchange desires to rename services to conform the naming of the 
offerings across all Nasdaq Affiliated Markets. The Exchange proposes 
to reorganize Section 3 to list order and quote protocols first, order 
and execution offerings next, followed by data ports and other ports as 
the last section. The Exchange proposes to list data offerings which 
are offered at no cost. The Exchange is also proposing to remove 
obsolete pricing. The Exchange believes that aligning its offerings, 
where relevant, across the Nasdaq Affiliated Markets will provide more 
transparency as to the offerings for market participants.
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    \3\ The Exchange will file a similar rule change on each Nasdaq 
Affiliated Market to conform the offerings by amending naming to 
make them similar and delineating each offering on the fee schedule 
where no fee is assessed.
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Ports
    The Exchange proposes to define a port within Section 3 to provide 
additional clarity to the fee schedule as ``a logical connection or 
session that enables a market participant to send inbound messages and/
or receive outbound messages from the Exchange using various 
communication protocols.'' The Exchange believes this definition will 
assist Participants in distinguishing ports from other offerings.
Order and Quote Protocols
    The Exchange proposes to add a new section (i) and include the 
following introductory sentence, ``The following order and quote 
protocols are available on NOM.''
    Today, NOM offers market participants an Order Entry order protocol 
and an SQF quote protocol. These fees currently exist on the fee 
schedule. The Exchange is not amending any pricing related to these 
protocols. The Exchange proposes to rename ``Order Entry Port Fee'' as 
``FIX Port Fee.'' This description is more accurate as ``FIX'' is the 
name of the

[[Page 22540]]

order entry protocol. Nasdaq ISE LLC uses the terminology ``FIX'' 
within its fee schedule.\4\ A Participant may request an SQF Port or an 
SQF Purge Port, the pricing is the same for these ports.\5\ SQF is an 
interface that allows market makers to connect and send quotes, sweeps 
and auction responses into the Exchange. The SQF Purge port only 
receives and notifies of purge requests from the market maker. The 
proposal is to include a line item for each offering because a 
Participant may either select an SQF port or an SQF Purge Port. The 
price does not vary. The Exchange separately lists these offerings on 
Nasdaq ISE, LLC. A separate line item will make clear that there are 
two options for this offering. The pricing for these ports is not being 
amended.
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    \4\ See ISE fee schedule at Chapter V, D.
    \5\ Pricing is incremental for these ports. Pricing is based on 
the number of ports that a Participant has subscribed to in a given 
month.
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    The Exchange believes that grouping the available order and quote 
protocols together into their own subsection will provide greater 
transparency within its fee schedule as to the available protocols.
Order and Execution Information
    The Exchange proposes to add a new section (ii) and add the 
following introductory sentence, ``The following order and execution 
information is available to Participants.'' The Exchange proposes to 
group the available order and execution information that is particular 
to a Participant's executions on NOM into its own subsection. Today, 
NOM offers CTI, Order Entry DROP, TradeInfo and OTTO DROP. The Exchange 
proposes to rename ``Order Entry DROP'' as ``FIX DROP'' for the reasons 
described above. Nasdaq ISE, LLC uses the term FIX DROP. The Exchange 
proposes to rename ``TradeInfo'' as ``NOM TradeInfo Interface'' to make 
clear that this particular offering is an interface. The Exchange 
proposes to relocate these current fees into section (ii). No changes 
are being made to pricing and these fees exist today within Section 3.
Data Ports
    The Exchange proposes to add a new section (iii) and include the 
following information, ``The following data ports fees apply in 
connection with data subscriptions pursuant to NOM Rules at Chapter XV, 
Section 4. The below port fees do not apply if the subscription is 
delivered via multicast.'' The following sentence is simply being 
relocated, ``These ports are available to non-NOM Participants and NOM 
Participants.'' The Exchange believes the addition of these sentences 
makes clear where the related applicable data fees can be located and 
when the fees for ports are charged. The Exchange notes that if the 
subscription is delivered via multicast, the port fee is not charged. 
There are multiple ways in which data can be communicated. Multicast 
refers to sending data across a network to several users as [sic] a 
time. Unicast on the other hand sends data across a network to a single 
recipient. Finally, TCP, which stands for Transmission Control Protocol 
and is also known as ``TCP/IP'' refers to the suite which includes the 
internet Protocol, provides host-to-host connectivity. Today, the 
Exchange requires a port when a Participant utilizes Unicast and TCP/IP 
delivery, but does not require a port when a Participant selects 
multicast delivery. The Exchange believes this additional information 
will add more transparency to the fee schedule for Participants 
selecting data transmission options. The Exchange notes the current 
offerings for NOM, ITTO and BONO, are being relocated within this 
section. No changes are being made to the fees.
Other Ports
    The Exchange proposes to adopt a new section (iv) entitled ``Other 
Ports'' to include Disaster Recovery Ports. Today, the Exchange offers 
Disaster Recovery Ports for all ports reorganized into proposed 
subsections (i), (ii) and (iii). The Exchange is noting that these 
ports are available at no cost to make clear their availability.
ITTO Wave Ports
    Today, the Exchange offers Remote ITCH to Trade Options (ITTO) Wave 
Ports. These ports are subject to a 30-day testing period during which 
the recurring monthly fees are waived, and a one-year minimum purchase 
period that begins at the conclusion of the 30-day testing period at 
the below rates:

------------------------------------------------------------------------
                                           Installation      Recurring
                Location                        fee         monthly fee
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Secaucus................................          $2,500          $7,500
Mahwah..................................           5,000          10,000
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    NOM no longer offers these ITTO Wave Ports to its Participants. The 
Exchange proposes to eliminate these fees from the fee schedule.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Securities Exchange Act of 1934,\6\ in 
general, and furthers the objectives of Section 6(b)(5) of the Act,\7\ 
in particular, in that it is designed to promote just and equitable 
principles of trade, to remove impediments to and perfect the mechanism 
for a free and open market and a national market system, and, in 
general, to protect investors and the public interest, by providing 
greater transparency as to the order and execution information offered 
on NOM. The Exchange's proposal to reorganize Section 3 and rename 
certain offerings to conform to other Nasdaq Affiliated Markets will 
provide clarity as to the offerings and uniformity in naming similar 
offerings. The Exchange believes that its new structure makes clear the 
differences in its offerings and the availability of various options 
within each type of offering. The Exchange's proposal is consistent 
with the protection of investors and the public interest in that the 
proposal provides greater transparency as to the offerings, the 
application of fees and the availability of offerings which are offered 
at no cost. The Exchange's proposal to define a port should also 
provide market participants with greater insight into the terminology 
utilized within Section 3.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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    Finally, the Exchange's proposal to eliminate ITTO Wave Ports is 
consistent with the Act because these ports are no longer offered to 
any Participant and removing the fees will eliminate confusion as to 
the Exchange's current offering.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\8\ the Exchange does 
not believe that the proposed rule change will

[[Page 22541]]

impose any burden on intermarket or intra-market competition that is 
not necessary or appropriate in furtherance of the purposes of the Act. 
The Exchange's proposal does not impose an undue burden on competition, 
rather the Exchange is seeking to provide greater transparency within 
its rules with respect to the various order and execution information 
offered on NOM. The offerings are available to all Participants. The 
Exchange does not intend to amend pricing, rather it proposes to make 
clear the application of the current pricing.
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    \8\ 15 U.S.C. 78f(b)(8).
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    With respect to the ITTO Wave Ports, no Participant utilizes these 
services today. Eliminating these fees will avoid confusion as to the 
Exchange's current offerings.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the proposed rule change does not (i) significantly affect 
the protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate if consistent with the protection of investors 
and the public interest, the proposed rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) 
thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's intent to file the proposed rule change, along with a 
brief description and text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. The 
Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally 
does not become operative for 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\12\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. The Exchange states that 
such waiver will allow it to update its rules immediately to provide 
more detailed and reorganized information regarding its offerings and 
further the protection of investors and the public interest because it 
will provide greater transparency as to the offerings available to 
members. For this reason, the Commission believes that waiving the 30-
day operative delay is consistent with the protection of investors and 
the public interest and, therefore, the Commission designates the 
proposed rule change to be operative upon filing.\13\
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    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NASDAQ-2018-036 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASDAQ-2018-036. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NASDAQ-2018-036, and should be submitted 
on or before June 5, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-10253 Filed 5-14-18; 8:45 am]
 BILLING CODE 8011-01-P